Nov 14 - Standard & Poor's Ratings Services today requested comments on its
proposal to revise its hybrid capital criteria for corporate issuers (see
"Request For Comment: Criteria: Assigning "High" Equity Content To Corporate
Hybrid Capital Instruments"). We are proposing to update our hybrid capital
methodology for determining the equity content of certain corporate hybrid
capital instruments, i.e., the degree to which these instruments are included in
our measures of capital for issuers, especially those classified as having
"high" equity content.
Standard & Poor's is proposing to update its hybrid capital methodology for
determining the equity content of certain corporate hybrid capital
instruments, i.e., the degree to which these instruments are included in our
measures of capital for issuers, especially those classified as having "high"
equity content. Under the proposal, we would no longer assign "high" equity
content to a hybrid capital instrument issued by a corporate issuer that has:
-- A stated or effective maturity;
-- Any step-up coupon feature or equivalent financial incentive to
-- Except as described below, any type of call option within 10 years of
the issue date.
We would, however, consider options to call or redeem an instrument within the
first 10 years as compatible with "high" equity content classification if the
call options are triggered by external events such as tax, legal, regulatory,
or accounting changes, and only to the extent that we would view those events
as unlikely to occur.
The proposed criteria apply to hybrid capital instruments issued by corporate
entities (except leveraged buyout companies) and North American insurance
holding companies. They would not apply to:
-- A mandatory convertible security that meets the criteria for high
equity content described in the section "'High' Equity Content Due To
Mandatory Convertibility" of "Hybrid Capital Handbook: September 2008
Edition", published on Sept. 15, 2008, and
-- Hybrid capital instruments that are strategically held by a group
entity of the issuer as described in "Credit FAQ: Knowing The Investors In A
Company's Debt And Equity", published on April 4, 2006.
For full details of the proposed criteria, please see "Request For Comment:
Criteria: Assigning "High" Equity Content To Corporate Hybrid Capital
We encourage market participants to submit written comments on the proposed
criteria by Dec. 16, 2012. Please send your comments to
CriteriaComments@standardandpoors.com. Once the comment period is over, we
will review the comments and publish the updated criteria.
The report is available to subscribers of RatingsDirect on the Global Credit
Portal at www.globalcreditportal.com. If you are not a RatingsDirect
subscriber, you may purchase a copy of the report by calling (1) 212-438-7280
or sending an e-mail to email@example.com. Ratings
information can also be found on Standard & Poor's public Web site by using
the Ratings search box located in the left column at www.standardandpoors.com.